Your first cushion

How big should my first safety cushion be?

One month of what you need every month, in money you can reach. That’s your third circle in Token Circles, Breathing room. Three months is the fourth, Solid ground, and six is on its checklist.

Why one month first

The figure you’ll often hear is three to six months of expenses. It’s a good place to end up and a hard place to start. The CFPB’s Your Money, Your Goals toolkit includes “you must save at least 3 to 6 months’ worth of living expenses” in its quiz, and its answer key marks that statement false. The same toolkit suggests a first goal of $500, then $1,000, and says the right amount varies from person to person.

Small amounts already change things. The FINRA Investor Education Foundation and SaverLife compared savers’ balances with how they were getting by. Balances above $100 went with keeping the utilities on and staying away from high-cost borrowing, and balances above $250 with more secure housing. The study shows a link and doesn’t prove the money caused it, but the amounts are small.

Big bills are common, too. In JPMorgan Chase Institute data, 37 percent of families made a large, unusual payment for medical care, car repairs or taxes within a year, and the median one was $1,520. The institute also estimated that median-income families needed $4,800 in liquid assets to ride out 90 percent of the swings in their income and spending. They held $3,000.

And many people start from less. In the Federal Reserve’s survey of US adults, 55 percent said they had money set aside for three months of expenses in 2025, and 30 percent said they couldn’t have covered three months by any means, borrowing included. In the EU, 30.0 percent of people said in 2024 that they could not cope with an unexpected expense.

A month of what you need is a target you can see the end of. The bigger cushions come next, on the circles that follow.

How Token Circles counts your cushion

Your cushion is the money you can reach, divided by a month of what you need.

The money you can reach is:

  • your savings and cash accounts, at today’s balance, and
  • your current accounts at their lowest point: the lowest total they ended a day on in the last 30 days, which is the money that stayed in them through the month’s bills.

None of it counts below zero, and an overdraft on one account takes nothing from another. Investments aren’t part of it.

A month of what you need is your average monthly spending in the categories needed every month, over up to the last 12 tracked months before this one. Token Circles needs 3 tracked months before it can count your cushion. A category counts as needed by its kind unless you say otherwise:

  • needed: housing, utilities, groceries, transport, health, insurance, childcare and education, and debt payments;
  • not needed: eating out, subscriptions, shopping, leisure, gifts, taxes and fees, and other.

A category with no kind counts as needed, and so does spending with no category at all, which keeps the target on the large side. Money moved between your own accounts isn’t spending. Until anything says what’s needed, all of your spending counts, and the app says what you spend instead of what you need.

Under a month, the cushion is counted in days, 30 to a month, rounded down.

An invented example. Your current account’s lowest end-of-day total in the last 30 days was €420, your savings account holds €600 and there’s €30 in cash, so you can reach €1,050. Your needed spending averages €1,500 a month. The cushion is 0.7 months, which Token Circles shows as 21 days, with €450 to go to a full month.

Where to keep it

The CFPB calls a bank or credit union account generally one of the safest places for an emergency fund, and points out that cash can be stolen, lost or destroyed. It also names recurring transfers to savings as one of the easiest ways to build one. In Token Circles, the cushion step links to Goals, where you can set it up as a goal.

Sources

All read on 31 October 2026.

Token Circles explains and calculates. It does not give financial advice. For decisions about investments, loans or pensions, talk to a licensed adviser.